Monday 8 August 2011 00.59 EDT
First published on Monday 8 August 2011 00.59 EDT

The European commission has launched an inquiry into airlines' controversial "add-on" charges that allow them to offer low prices bearing little resemblance to what ticket buyers end up having to pay.

Siim Kallas, a European commission vice-president, who is also the organisation's transport commissioner, said he was concerned about the growing practice of airlines offering attractive, affordable, "headline prices" for flights that are then subject to baggage charges, credit and debit card fees, and airport check-in fees.

The practice, already criticised by UK consumer groups, has been under the spotlight for being used, as a matter of course, by budget airlines such as Ryanair. But it is also a feature of scheduled carriers as well as train firms and rail websites.

Amid growing concern that airlines exploit passengers by expanding the list of additional charges – which, at one stage, were routinely included in the basic fare – Kallas revealed that the commission shared his concerns about the confusing practices and admitted that spiralling consumer complaints were difficult to address within current laws.

He has launched a study into whether EU rules need to be amended, which will report this autumn with legislative action expected next year. The inquiry follows pressure from the Labour MEP Brian Simpson, who is chair of the European parliament transport committee. He believes an investigation is long overdue.

In a letter to Kallas, he said the "marked trend" of adding charges for basic services was "giving rise to serious concern". He added: "Passengers have a right to receive basic services for … their air tickets. It is necessary to ensure price transparency."

He said the situation was similar to what happened with package holiday contracts; in that case, basic rules governing pricing of such holidays were set out in an EU directive.

Simpson said he wanted to see airlines starting with a top price then deducting charges according to passenger choice, rather than starting with rock-bottom prices and adding on. Some carriers, he said, were advertising fares as low as €6 (£5.23). "It is impossible to fly for that. We need clarity," he said.

Simpson said the list of additional charges was growing. Ryanair had introduced an "EU 261 levy", which charges customers a fee to cover any compensation that might have to be paid under EU passenger rights legislation. "It doesn't seem fair or appropriate to ask passengers to help cover the business risks of Ryanair."

The situation has been compounded by the ease of buying tickets online, where people may decline to cancel a transaction at a late stage as the extra charges kick in. Consumers have to agree with carriers' terms and conditions to proceed with the transaction.

In a letter to Simpson in July, Kallas announced the inquiry and said: "According to EU regulation 1008/2008 the final price of air fares should be indicated at all times, including taxes, charges and surcharges and fees, which are unavoidable or foreseeable. Commercial practice has, little by little, segregated specific services that may be avoidable (check-in at the counter, excess baggage weight, checked baggage), but which up to now have formed part of the basic fare. Such a pricing practice that could be defined as price unbundling or 'a la carte' may increase consumer choice but can also create confusion: the final price at the time of payment increasingly differs from the announced price, rendering price comparison impracticable and leading to frustration, and consumer mistrust."

Monique Goyens, director general of the European Consumers' Organisation, said: "It's high time the commission looks into this issue. More and more airlines charge their clients unnecessary high costs for paying by credit or debit card, inflating the price tag of flights advertised as low cost. Accepting card payments to buy a ticket is not a service delivered by a company. Passengers should not be charged for exaggerated and unjustifiable card fees.

"The promotion of e-commerce is a top priority for Europe but consumers will not have trust in online commerce when they feel ripped-off when making a card payment on the internet."Ryanair has not replied to the Guardian. An easyJet spokesman commented: "As we don't charge for check-in or printing boarding cards, we feel it would be more appropriate for the airlines that do charge for these things to comment instead."

In June the UK's Office of Fair Trading said it would be tackling "rip-off" surcharges levied on debit and credit card transactions by travel companies, particularly airlines, which it said raked in £300m by these means in 2009.

Case study

Nick Murton of Kent recently flew by easyJet from Gatwick to Edinburgh, expecting to pay £121 for two return seats.

"My initial anger was that when booking the flight, at the very last second before confirming and clicking 'payment'[the website] came up with a disgusting choice of 'charges' when paying: £8 for a debit card and £12.95 for a credit card.

"Now, I am aware that there has been a lot of recent media debate on this subject and rightly so. It is appalling. Charging customers to pay for their tickets? I think it costs about 30p to process a card payment. I have been in business and have never charged a customer to pay me.

"My anger was then compounded when checking in at 7am in the morning I was told I would have to pay £25 for my baggage. It was only a trolley on wheels – granted too big to take on board – but nonetheless, another outrageous last minute surprise. I then enquired about coming back and lo-and-behold was informed it would be a further £25 to bring my clothes home again. Do airlines honestly expect all their customers to travel away for three to four days and stay in the same set of clothes?

"So, here I am finding myself with an extra £58 cost on top of my ticket price. Of course the chap at Gatwick explained that it would have been explained on their website, but their pricing structure and website bookings are so complicated and not transparent whatsoever. It was probably very small print, and one would expect to be able to take one case in the hold.

"I feel totally and utterly ripped off and fleeced by this experience. And now I find it impossible to complain as there is no email address I can see to complain to, only an 0871 telephone number charging 10p per minute – another easyjet rip-off."